Welcome to Washington

By the end of the week, the political landscape in Washington will have changed. We will have a new Congress and attention will quickly turn to the 2012 presidential contest.

Yet, regardless of who ends up in charge of Congress, or who begins making frequent trips to Iowa and New Hampshire, certain facts will remain the same.

Health care costs, including Medicare and Medicaid, will still be growing faster than the economy. Social Security will still promise more benefits than it can pay under current law. We’ll still be fighting two wars. The costs of extending all the expiring 2001 and 2003 tax cuts will still top $4 trillion. The economy will still be stagnant. And for all these reasons, the debt will still be on an unsustainable track.

Not since 1992, when independent presidential candidate Ross Perot captured 19 percent of the popular vote, has fiscal policy been such a dominant issue in a national election. Voters are clearly uneasy with trillion dollar deficits and a growing debt that is on track to reach World War II levels over the next decade.

As retiring Senator Judd Gregg (R-NH) told The Washington Post last week, “This is an election that’s going to send a very clear message: Do something about the deficit and debt.”

Do something, yes. But what?

That question is not likely to be answered by the election results. Few candidates have had anything useful to say about realistic fiscal solutions. To the contrary, many new members of Congress will have been elected on pledges to foreswear the very things that will be needed: spending cuts in popular entitlement programs and defense, tax increases and, most of all, compromise.

The difficulty of honoring these various pledges will become apparent as soon as the new Congress begins to write a budget resolution.

Suppose, for example, that Republicans win at least one branch of Congress and produce a budget resolution that extends all expiring tax cuts, repeals “Obamacare” and cuts non-security appropriations back to 2007 levels, as promised. It may come as an unpleasant surprise to their constituents, but the resulting deficits would remain near $1 trillion annually and the debt projections would hardly be something to boast about at Tea Party rallies.

What if the Democrats retain control?

We saw the likely result in this year’s failed budget process. Unwilling to write a budget resolution that showed enormous deficits, and unable to agree on the spending cuts or tax increases that would produce lower deficits, they simply declined to write a budget.

If there is a split decision, with Republicans in charge of the House and Democrats in charge of the Senate, each may feel free to write its own fantasy budget with no prospect of compromise. That approach might help excite (or incite) their bases going into 2012, but it won’t solve any problems.

There is, however, a glimmer of hope. Within a month following the elections, two bipartisan groups are scheduled to release recommendations for reining in the growing debt.

On November 17, the Bipartisan Policy Center’s Debt Reduction Task Force, led by former Republican Senator Pete Domenici and former Clinton administration budget director Alice Rivlin, will report its findings at a Washington press conference. As a member of this Task Force, I can say that our deliberations have been substantive, respectful and comprehensive. Our plan will show at least one way out of the fiscal morass if Congress and the administration wish to tackle the problem in the same cooperative spirit.

Then on December 1, the President’s bipartisan National Commission on Fiscal Responsibility and Reform, co-chaired by former Clinton administration Chief of Staff Erskine Bowles and former Republican Senator Alan Simpson, is scheduled to make its report. While it is far from clear at this point whether the report will garner the necessary support (14 out of 18 members) to be taken up by Congress in the lame-duck session, anything that emerges with bipartisan support should be embraced by the administration and given consideration by Congress.

At a minimum, these reports will provide options for those willing to take seriously the voters’ mandate to “do something” about the nation’s perilous fiscal path.

The campaign is ending. The problems remain. What’s needed now is a dose of political will.